Malaysian banks improve margins in Q2 as deposit costs ease

CIMB leads Malaysian banks in H1 2024 returns.

Malaysia banks witnessed loan growth and improving net interest margins (NIM) in the first six months of 2024, although deposit growth lagged.

CIMB had the most commendable H1 2024 performance, registering a return on assets (ROA) of 1.05%, which is 7 basis points (bp) higher than in H1 2023, according to a report by CreditSights, owned by Fitch Solutions.

CIMB outpaced Maybank, which reported a ROA of 0.96% and RHB. RHB's ROA of 0.89% is 11 basis point slower than in H1 2023.

All three banks’ NIMs improved in Q2 compared to Q1, on the back of the deposit competition easing and improving domestic liquidity situation during the period.

The banks notably flushed out costlier deposits, CreidtSights said.

Amongst them, Maybank reported a larger NIM compression of -15 basis points, versus a 5bp contraction at CIMB and the 1bp rise at RHB.

Maybank has notably revised its FY2024 guidance downward, citinginsufficient lending discipline amid a high funding cost environment and a focus on volume growth, CreditSights said.

All three banks reported loan growth, with Maybank achieving the largest expansion at 10.6% versus CIMB’s 4.2% loan growth and RHB’s 6.4% loan growth.

Capital continues to be strong across all three banks, with RHB still having the highest CET1 ratio at 16.5%, CreditSights said.

In comparison, Maybank has a CET1 ratio of 14.7%, and CIMB’s ratio is 14.5%.